Essa Oil Refinery, located at Marsden Point, New Zealand, is required to remove and dismantle the platform at the end of its useful life. The carrying amount of the platform is recorded in the statement of financial position as $3m. The value in use of the platform is determined to be $2.7 million. Further, the company has received an offer of $2.8m for the platform from another oil company. The bidder would take over the responsibility (and costs of 0.6m) for dismantling and removing the platform at the end of its life.

Required:

Determine the impairment loss that should be recognized.

2. A cash-generating unit comprises the following assets:

$'000

Building 1,400

Machinery 400

Equipment 300

Goodwill 180

Inventories 240

2,520

The recoverable amount of the cash-generating unit is estimated at $ 1,500,000.

Required:

Provide the journal entry to record the impairment loss.